Question: 1. Assume that the per-worker production function is Yt = 5 * Kt^(1/2). Further, assume that the saving rate, s = 0.2, the depreciation rate

1.Assume that the per-worker production function is Yt = 5 * Kt^(1/2). Further, assume that the saving rate, s = 0.2, the depreciation rate = 0.04 , and the populationgrowth rate, n= 0. Calculate the following:

(a)The steady-state values of the capital-labor ratio, K*, output per worker, Y* , investment and saving per worker, i* and s*, and consumption, c* .

(b)The new steady-state values of the capital-labor ratio, output, investment, and consumption (K1*, Y1*, i* and c*), if there is population growth so that n₁= 0.06.

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